Can Eurasia Transform Itself?
Time to think big, far beyond China’s Belt and Road.
For centuries, small powers across Europe and Asia have never had a chance to chart their own destiny. That could be changing with help of Europe & the USA.
From the Arctic Circle bordered by the Nordic nations in Europe to the steppes of Central Asia, the peoples that live and work across the breadth of the world’s oldest trade routes have an opportunity to secure their own future, dictated not by the whims of great powers, but by a common bond, seeking shared prosperity, security derived from stability and peace, and respect for national sovereignty.
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This future can, and in some respects is already being realized, through four interrelated projects: the European Three Seas Initiative, the reconstruction of Ukraine, an international effort for a “free and open” Black Sea, and the Middle Corridor, an expanse of energy production and distribution, value-added supply chains and transport stretching from Central Asia to the Mediterranean. Together, the enterprises comprising the Eurasia project will serve as the new backbone of prosperity linking East and West. Here is our thinking about why this could happen.
Why Now? The nature of great power competition has morphed in unanticipated ways over the last decade, but the result presents a unique opportunity for the nations of Eurasia to shape their own destiny.
For starters, much of the world has soured on China’s Belt and Road Initiative. There are multiple reasons: from fear of “debt traps,” to Beijing over promising and under delivering, to the revulsion of China’s “wolf warrior” diplomacy and irresponsible response to the COVID pandemic. The bottom line is that while there is widespread recognition of the value-added a modern Silk Road could bring to the modern world, the world is far less comfortable and confident today of China controlling it.
The consequences of Russia’s war on Ukraine have also reset the geopolitics of the region. In some cases, Moscow has been recognized as a long-term threat to peace and stability and nations are hedging for a more secure future through collective security, such as Sweden and Finland seeking to join NATO. In other cases, regimes see new opportunities to chart a more independent course while Russia is weakened and distracted.
Likewise, Iran has arguably entered into strategic overreach, embroiled in proxy wars and propping up surrogates, while at the same time struggling with unprecedented domestic discord, and still lacking access to Western markets, capital, and technology.
Finally, the distinct nature of modern great power competition has come into greater focus. Russia, Iran, and China are powers in the traditional 19th century mode, consistently seeking to establish ever more hardened and controlled spheres of influence. In contrast, the U.S., Europe, and key Indo-Pacific nations including Japan, South Korea, India, and Australia are more concerned with their own sovereignty and security and freedom of the commons, the right and ability for goods, people, services and ideas to freely transit oceans, skies, space, cyberspace. They are seeking more resilient and dependable global supply chains on land and sea. In turn, to realize that vision they have made a more expressed commitment to rule of law, transparency, respect for sovereignty, and environmental stewardship.
Further, these nations are better positioned and prepared to work with the Turkic States (Azerbaijan, Kazakhstan, Kyrgyzstan, Turkey and Uzbekistan) forging more constructive economic and diplomatic partnerships as well as working with Israel and other nations participating the Abraham Accords who are also interested in participating in the development of Southern Europe, the Caucuses and Central Asia.
The upshot is that in the modern world not all great powers are equal. Some make more promising partners, not only because they are willing to be actual partners and not overlords, but also because together they have the abundance of global capital to invest, represent huge markets, and advanced technological and engineering know-how and capabilities.
Finally, the U.S., Europe, and the Asian powers embracing a “free and open” Indo-Pacific have a vested interest in a successful economic zone running from the Arctic Circle to Southern Europe and across the Mediterranean and Black Sea to Central Asia. From expanding options for energy security, to developing markets, manufacturing capacity, and political stability and security, the “free worlds” great power see these regional projects as part building a more peaceful, prosperous, and resilient world.
What could drive this change? There are four components of what has been called the Eurasia Initiative that are interwoven require partners, investors, and collaborators as well as America’s elevated strategic attention for practical partnerships. In short, the stars have never aligned better for the nations of Eurasia to take responsibility for their own destiny.
What is The Three Seas Initiative? The lynchpin of Eurasia project is Central and Southern Europe, which still, in many ways, wears the scars of the neglect, exploitation, and mismanagement of Soviet control during the Cold War. The legacy consists of fragmented markets, inadequate, outdated, and insufficient infrastructure that makes for a poor conduit for North-South economic activity across Europe.
In recent years, various regional cooperation initiatives throughout emerging Central and Eastern Europe have been explored, formed, and pursued. The Three Seas Initiative is the most notable, practical case and should be further prioritized and brought to fulfillment.
Indeed, the task of making the Three Seas Initiative more practical operationally has gained greater urgency and necessity. In part, the lack of energy security, shortfalls in infrastructure, border security challenges, and inadequacies in collective defense were all highlighted as consequence of the Russian invasion of Ukraine. Putin’s war was a stress test and it clearly showed the need for more robust infrastructure and resilience in the heart of Europe. The formation of the initiative predates the war in Ukraine, but the war in Ukraine demonstrably proves how crucial it is to deliver a Europe whole, free, prosperous, and at peace.
The Three Seas Initiative held its inaugural summit in 2016 in Dubrovnik, Croatia, and since then annual summit and business forums have taken place across member states.
The initiative was launched to promote connectivity among the nations in the regions of the Black, Adriatic, and Baltic seas, supporting infrastructure, energy, and digital projects. Its significance includes geopolitical, economic, and energy security aspects.
The twelve countries of the initiative are Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovenia, and Slovakia.
The specific rationale for the initiative is that East-West infrastructure remains more developed and advanced than North-South linkages. This gap in infrastructure development has been a growing issue for the Three Seas Initiative states as well as the whole of Europe, particularly for the European Union’s ongoing but rather sluggish quest for energy independence.
The dominance of East-West pipelines and limited alternatives to those pipelines have been the core factor concerning these regions’ continued dependence on Russia for energy.
From a greater foreign policy perspective, the Three Seas Initiative can and should offer the U.S. and Europe an alternative engagement model to the Chinese Belt and Road Initiative in Central Europe and Beijing’s dwindling 16+1 cooperative development framework. The Three Seas Initiative potentially could also strengthen dual-use infrastructure for the forward collective defense of NATO.
In that setting, the goal of the Three Seas Initiative has been to implement tangible and pragmatic joint development projects that would operate on commercial terms and address the region’s chronic connectivity shortcomings through enhanced cooperation.
A focus on commercial enterprise rather than state-directed infrastructure programs offers the prospect for more dynamic, imaginative, responsive, and sustainable development. Further, it offers a clear alternative to traditional and largely ineffective foreign assistance programs which routinely are both more costly and consistently under deliver. Further, national participation in the initiative is an investment—one that will deliver a return to nations and taxpayers. Finally, the enterprise is a vehicle for tapping into global private capital, investing in a responsible manner that respects the rule of law and transparency of investment, a clear alternative to the development options offered by Russia and China.
One challenge for Western investment will be the increasing encroachment of Environmental, Social and Governance (ESG) standards that are being applied to the private sector. Problematically, many of these rules are driven political agendas, as opposed sound business and public practices. One example is climate policies that arbitrarily disadvantage investments in fossil fuels in favor of “green energy,” even where proposed investments cannot deliver reliable, affordable, and dependable energy supplies. Imposed political agendas, often emanating from Washington and Brussels undermine the efficiency and efficacy of private sector activity and compromise the synergies that economic freedom provides in delivering better goods and services to peoples, more responsibly addressing social costs than arbitrary politic dictates from politicians and bureaucrats. If the Three Seas Initiative is going to succeed like a business, it has to be run like a business not a pale imitation of Chinese state-directed economic activity.
In addition, undermining the private sector with political agendas, the initiative needs to overcome sluggish investment and support from Washington, Brussels, and Berlin, as well as several of the member states. Yet, the persistence of the initiative, the setting up of the infrastructure for the investment fund, and the geopolitical momentum to move forward make the case for optimism.
What about Ukraine Reconstruction? The postwar reconstruction of Ukraine ought to be integrated into the Eurasia project as a partner of the Three Seas Initiative. A stronger Ukraine could be a powerful economic engine for the region and stable, prosperous, and secure Ukraine could immeasurably contribute to regional stability.
One of the lessons of the Ukraine war is that the West can assist nations to break out of the “death spiral” imposed on nations along Russia’s periphery with territory occupied by Moscow. Ukraine, Georgia, and Moldova all sit on the frontier of Europe and NATO, but they are members of neither club. That makes them less risky targets for Moscow. They have something else in common: parts of each country are occupied by Russia. Moscow engineered the violent takeover of Moldova’s Transnistria in 1992, of Georgia’s Abkhazia and South Ossetia in 2008, and of Ukraine’s Crimea and Donbas in 2014, territory further expanded in the Russian invasion of 2022. In each case, the Russian occupation devolved into a frozen conflict prolonged less by ethnic divisions than by Moscow’s determination to hold these territories hostage.
Each of these countries has turned to the West, looking for military partnerships and economic integration as protection against further Russian aggression and leverage in eventually regaining lost territories. Both NATO and the European Union responded with positive signals: The beleaguered countries were told that if they would just make the reforms needed to achieve European integration and qualify for collective security, they would be welcomed into the clubs. In each of the republics, the popularity of Western powers skyrocketed.
Axiomatically, the Russians responded by making it clear that they would exert every effort to make European integration more difficult. Moreover, they vowed that the frozen conflicts would not be settled unless they are settled on Moscow’s terms.
Over time, the United States and Europe grew frustrated with the lack of progress. They were distracted by other priorities. They couldn’t see a practical way to break the logjam. They mostly settled into a habit of treading water, until Putin’s next disruptive act, such as the most recent invasion of Ukraine.
Breaking the death spiral requires doing something different. Instead of looking for political formulas to unfreeze the frozen conflicts, the focus ought to be on helping these three resilient states that have the capacity to resist Russian influence. Combatting corruption, promoting good governance, and upholding the rule of law are important qualities in an ally. But so too are economic prosperity, political stability, and security assets—and not just physical security assets, but energy and infrastructure resources as well.
There are applicable lessons here, learned the hard way in places like Iraq and Afghanistan. First, external nation-building is near impossible. Nations must rebuild themselves. Second, trying to rebuild your nation while under occupation and constantly threatened by enemies is no mean feat. Third, determined enemies can swiftly wipe away all progress made if the builders’ supporters simply walk off the job. We also learned that, when the United States and Europe walk away from foreign challenges that significantly impact our interests, the price is pretty steep.
The reconstruction of Ukraine is the place to start for doing things differently. Traditional foreign assistance and reconstruction efforts always disappoint. They are ill-suited to this task. Private investment and wealth creation, not dependence on the government and outside aid, should be at the center of Ukraine’s reconstruction strategy.
No country that has transitioned from poverty to economic prosperity has done so through foreign aid; it has done it by implementing pro-growth, free-market policies that unleashed the entrepreneurial zeal of its own people and drew in billions of dollars in foreign investment. The much-touted post–World War II Marshall Plan was a limited aid program centered on reviving the private sector. The largest recipients of reconstruction aid over the past decades—countries like Afghanistan, Iraq, and Bosnia-Herzegovina—have all failed as states.
An alternative approach would begin with first, and most importantly, eliminating all obstacles to the operations of its small and medium-size businesses. This is by far the best way to jumpstart the economy.
Second, a push for regional economic integration is the strategic response to the question of how to cut Ukraine’s dependence on Russia once and for all by reorienting its economy westward. This would also entail excluding Chinese participation in the reconstruction of Ukraine. Foreign Policy expert Victoria Coates advises, “assistance disallowing Chinese contracts has precedent in U.S. foreign aid….[t]his recognition should be broadened in any legislation related to funding for Ukraine reconstruction. Similar restrictions should be placed on assistance from the EU, the UK, Japan and others focused on rebuilding Ukraine.”
Third, and finally attract foreign capital and private sector investment, rather than government financed and state-directed rebuilding. The Three Seas Initiative could provide the investment infrastructure Ukraine needs and at the same time develop projects that better integrate the Ukrainian economy into the Eurasia project.
The major obstacle to the rapid rebuilding of Ukraine is that reconstruction will be hijacked by governments, International Financial Institutions (like the World Bank) and the self-interested aid industry, locking the country into debilitating aid dependency and eventually eroding the country’s resilience. Greater reliance on the Three Seas Initiative development fund as an alternative instrument of reconstruction is one way to combat the West’s impulse to rebuild wrong.
Why a Free and Open Black Sea? The Black Sea is at an important crossroads between Europe, Asia, and the Caucasus. Many important oil and gas pipelines, as well as fiber optic cables, crisscross the sea. Throughout the history of the region, the Black Sea has proven to be geopolitically and economically critical. The ongoing war in Ukraine has dramatically increased the strategic importance of the Black Sea. Goods transport along routes that skirt the southern shores of the Black Sea, between the Caucuses and Europe, has grown considerably since the war in Ukraine began.
Ensuring the fruition of connectivity between Three Seas Initiative and the Middle Corridor requires making and keeping Black Sea “free and open”. This is imperative. The war against Ukraine has sharpened attention on Black Sea security. In particular, the Russian blockade of Ukrainian grain exports is worrisome for its potential harm to food supplies worldwide.
One pivotal factor in future developments in Black Sea security will be the degree to which Southern European nations can engage the U.S. in regional security. Central Europeans have already been courting a deeper U.S. involvement in the Three Seas Initiative on developing regional infrastructure. There has also been some discussion of expanding the initiative into Three Seas plus nations to include countries that are not members of the European Union, such as Ukraine, Georgia, and Moldova. Realizing this expansion could well require more U.S. and European engagement and support. There are a number of initiatives that could be taken.
The major obstacle in the past has been the lack of energy and resolve in the West to tackle the challenge, but that is changing. The NATO Strategic Concept unveiled in Madrid on June 29 highlighted the necessity of strengthening NATO’s forward defensive posture, particularly singling out the Black Sea. This development is unsurprising given Russia’s war on Ukraine. This year, members of the U.S. Congress unveiled their own plan to address these challenges.
Clearly, the momentum is moving in the right direction.
What is The Middle Corridor? One of the geostrategic consequences of Putin’s ongoing assault against Ukraine and its broader implications for the global economy has been the enhanced impetus for ensuring the pragmatic and strategic utility of the “Middle Corridor” (also more formerly known as the Trans-Caspian International Transport Route or TITR), which runs from Europe to Kazakhstan, the Caspian Sea, Azerbaijan, and Georgia, and from there, via the Black Sea, to Turkey.
The Middle Corridor has gained greater relevance and renewed significance as a viable commercial transport route alternative to the long-established Northern pathway through Russia.
As a matter of fact, even a brief glance at the map unequivocally shows the unique geographical linkages that the Middle Corridor presents as a strategic way of securing a viable cross-continental commercial route. Running across the vital regions and facilitating container and commodity transport, the corridor is the shortest route that connects and puts together East and West.
China, which has been eager to expand its economic networks, had hoped to dominate the utilization of the Middle Corridor as part of its expanding BRI. But countries in the region have grown increasingly uneasy about participating in it. They’ve witnessed China leaving many of its BRI promises unfulfilled. And they have also become more concerned that China’s BRI engagement comes with too many geopolitical strings attached and can lead to debt traps.
This outcome of the evolving geopolitical circumstance has indeed fostered a revitalized momentum for making the Middle Corridor emerge or re-emerge as an alternative transcontinental trade route. A high-functioning Middle Corridor would give the whole of Europe resilient and diversified supply chains; new sources for energy diversification and energy security, and new opportunities for value-added manufacturing and resource development.
On the other hand, there are real obstacles. Making the Middle Corridor work is not an easy task, which will take considerable degrees of time, financial means, and political willingness. With many economic and political challenges lingering around, the cross-country transportation route will, by no means, become the cheapest option anytime soon. There is no customs union, joint tariff coordination, or transnational digital integration among Middle Corridor nations. Nor is there sufficient infrastructure to accommodate the volume of goods handled by the Northern route. For example, current infrastructure can accommodate only about 5 percent of the intercontinental rail trade.
Further, the West is not sufficiently investing in the region. It is crucial for Europe that significant investment and infrastructure projects aim at removing geopolitical vulnerabilities, instead of accumulating them. The Three Seas Initiative, for instance, is important in part because it represents a political alternative to the supply chain flows dominated by authoritarian regimes. The Middle Corridor can be an extension of that.
Before the Russian invasion of Ukraine, the European Union declared its intention to expand the Trans-European Transport Network (TEN-T) toward the Eastern Partnership states. The main thrust was to develop the transport capacities of Georgia and Azerbaijan. That project has yet to be realized. Further, Europe should be investing right now in developing a trans-Caspian pipeline to link energy in Central Asia to the West.
There is, however, cause for optimism. In an increasingly raucous world where nations are starved for energy and diversifying supply chains to reduce risk has become more desirable, the route could be viable and cost-effective.
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